The southern property market has bottomed out after falling rubber prices threw the region’s economy into the doldrums in recent years, says the Bank of Thailand.
Wajeetip Pongpech, the central bank’s director of risk management policy, said the property market, particularly in major southern provinces, was recovering thanks to tourism.
“There’s still a silver lining despite the sluggish period, as the tourism sector in key southern provinces grew by 25.7% during the first five months of this year,” she said.
In Phuket, Songkhla and Surat Thani, the tourism industry rose 7.2%, 61.5% and 24.7%, respectively. Chinese were the major tourist arrivals in Phuket, replacing the Russians and Malaysians that drove Songkhla’s economy.
“Government spending is also a major factor that will help to drive the southern economy in the second half if rubber
and fisheries remain weak,” Ms Wajeetip said.
She said only the strong developers remain in the market, which is growing in emerging destinations such as Phangnga, Krabi and Trang as indicated by the increasing number of construction areas that won construction permits.
The Real Estate Information Center (REIC) said Phuket residential supply last year was 73% sold, with single houses and townhouses 75% sold and condos 72%. However, the absorption rate of condos shrank to 4.9% a month from 9.4% last year.
Thanusak Phungdet, president of the Phuket Real Estate Association, said the province’s condo supply was worrisome due to oversupply.
The REIC reported 5,455 condo units remaining for sale from 19,710 total units at the end of last year, the largest of any destination.
Mr Thanusak said a new trend in the Phuket condo market was some projects now offered a guaranteed return to buyers for five to seven years from developers that rent out units to tourists.
Despite a tourism recovery in the province, average spending per head remains lower than in past years when Europeans dominated tourist arrivals, he said.